Bulletin ID
DLB - 97 - 41
| PublicationDate: 10/1/97 BulletinID: DLB - 97 - 41 October 1997 DLB-97-41 Dear Colleague: This Direct Loan Bulletin highlights certain processing changes made for Year 4 (1997-98) of the Direct Loan Program. THE GREATEST ENHANCEMENT FOR SCHOOLS RESULTING FROM THE YEAR 4 PROCESSING CHANGES IS THE ABILITY OF THE LOC TO PROVIDE SCHOOLS WITH TIMELY INFORMATION AS TO THE BOOKED STATUS OF A LOAN. SCHOOLS CAN NOW DETERMINE WHETHER OR NOT A LOAN HAS BOOKED BY REVIEWING THE PROMISSORY NOTE AND DISBURSEMENT ACKNOWLEDGMENTS RETURNED BY THE LOC . SCHOOLS WILL NO LONGER HAVE TO WAIT UNTIL THE SUBMISSION OF THE SCHOOL'S MONTHLY RECONCILIATION FILE TO DETERMINE THE RECONCILIATION (BOOKED) STATUS OF A LOAN. FOR DIRECT LOAN PROGRAM YEAR 4 (1997-98), when a DISBURSEMENT RECORD has been received, accepted by the LOC and RESULTS IN THE LOAN BEING BOOKED, the acknowledgment of the disbursement record returned by the LOC will include a "STATUS FLAG" indicating that the record has been reconciled. This status flag is in addition to the disbursement status flag on the disbursement acknowledgment. The current amount of the loan that has been disbursed to the borrower (the cumulative amount to date, including adjustments and cancellations) will also be returned with this acknowledgment. If the disbursement record is accepted and does not book the loan, the acknowledgment will indicate that the disbursement has been accepted, but not reconciled (booked), and will also provide the reason why it did not reconcile (book). Similarly, when a PROMISSORY NOTE has been received, accepted by the LOC and RESULTS IN THE LOAN BEING BOOKED, the promissory note acknowledgment will include a "STATUS FLAG" indicating that the record has been reconciled. This status flag is in addition to the promissory note status flag returned on the promissory note acknowledgment. In addition, the current amount of the loan that has been disbursed to the borrower (the cumulative amount to date, including adjustments and cancellations) will also be returned with this acknowledgment. If the promissory note is accepted and does not book the loan, the acknowledgment will indicate that the promissory note has been accepted, but not reconciled (booked). Once the loan has booked, regardless of whether it was the promissory note or the disbursement that booked the loan, all subsequent ACCEPTED disbursements (including adjustments and cancellations) will be reconciled. All acknowledgments for subsequent disbursements will include a reconciliation (booked) flag that will indicate that these disbursements have been reconciled. In addition, once the loan has booked, all subsequent disbursement acknowledgments (including adjustments and cancellations) will include the current amount disbursed to the borrower. After the loan has been booked, since all loan disbursements are considered reconciled (booked) when accepted, these disbursement records should NOT be included in the monthly reconciliation file submitted by the school. The school's MONTHLY RECONCILIATION FILE should now include ONLY cash detail records (drawdowns and excess cash) and UNBOOKED DISBURSEMENT RECORDS. THE FOLLOWING EXAMPLE ILLUSTRATES THE YEAR 4 PROCESSING CHANGE: A school reports an actual disbursement amount of $2,000 for a borrower. The loan origination record and promissory note have already been accepted by the LOC and the school has imported the corresponding acknowledgments. When the school imports the disbursement acknowledgment, the acknowledgment will indicate that the disbursement has been accepted. In addition, the reconciliation status will indicate that the disbursement has been reconciled (booked) and that the current amount of the loan is $2,000. After reporting the $2,000 disbursement to the LOC, the school makes an adjustment decreasing the disbursement amount by $1,000. When the adjustment is reported by the school, the acknowledgment will indicate that the adjustment has been reconciled (booked) and the current amount of the loan is now $1,000. Since these records will have already been reconciled, these records should NOT be included in the reconciliation file submitted by the school. YEAR-SPECIFIC CASH BALANCE Beginning with YEAR 4 (the 1997-98 award year), and for all future award years, a school's cash balance will be year-specific. For Year 4, all schools' cash balances will begin at zero and schools will be responsible for maintaining a separate cash balance for Year 4. Specifically, drawdowns for Year 4 MUST BE SEPARATE FROM DRAWDOWNS FOR ANY PRIOR AWARD YEAR. For Option 1 and Standard Origination schools, the LOC will generate separate Year 4 drawdown requests to the Department of Education. For Option 2 schools, if funds are drawn down on the same day for both Year 4 and a prior year, the school will need to perform two separate drawdown requests. Excess cash for prior years must be returned separately from excess cash for Year 4. (See Direct Loan Bulletin 97-12). We are committed to providing the best level of service to you. If you need further assistance, please call the Direct Loan Task Force at 202/708-9951. Thank you for your continued support. Sincerely, Joe L. McCormick Chair Direct Loan Task Force |